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EU: Russia (EUC Report)

I join in congratulating the noble Lord, Lord Teverson, his team, and his predecessor, the noble Lord, Lord Roper, on tackling this vast issue with such gusto and so comprehensively. You hear people say that Russia has problems, is flawed, has a declining population and is over reliant on oil and gas. However, it remains a huge factor in the global equation. Despite its declining population, it is a nation of colossal innovation and ingenuity and should never be underestimated. It stretches from Europe at one end right into the areas of growing power—the areas where the global pattern will be decided in this century and the next: the rising areas of Asian dynamism. The relations between ourselves and this huge area—this fantastic nation—are enormously complex and have not been going very well. Indeed, in the follow-up report, Sir Roderic Lyne speaks of a deteriorating spiral in relations between the US and Russia. After the publication of the original report in May last year, that would apply to the whole situation, including the UK-Russian relationship in particular, which has been especially fraught and marked by almost incomprehensible and very frustrating things such as the attacks on the British Council, which my noble friend Lord Selkirk rightly mentioned. Those are a very bad stain on the Russian behaviour pattern which we should not brush aside but should keep returning to. Since the original report last May, we now have plenty of material for a follow-up report. We have had the Georgian saga, which, as my noble friend Lord Crickhowell said, was unpredictable, except in the sense that we all know that Russia has been raging around in the Caucasus for the past 250 years since the days of Shamil and long before, so perhaps there is no long-term surprise at Russian involvement. I could not help saying to some Russian friends after the Georgian affair, when they said that they would like to restore a commonwealth out of their near neighbourhood, that if they wanted a commonwealth, perhaps they should learn from the British approach, which is, on the whole, to embrace and support our Commonwealth members rather than to invade them, which might not be quite such a good way of making friends. The noble Lord, Lord Anderson, and others have spoken with great knowledge on the Georgian situation. It is deeply unsatisfactory, but there we are. Then there was the Ukrainian gas saga, which was very predictable. That comes around from time to time, and we are going to hear a lot more about that. I shall say more about it in a moment. Then there was the reputed offer from the new President, Barack Obama—I am not sure that we have got to the bottom of this—suggesting that if Russia co-operated more on the Iran question, it would be possible to wind down the anti-missile systems that are placed, from the Russian point of view, bizarrely and provocatively at the eastern end of Europe. It may be that the deal was the other way around—if the Russians co-operated, the missiles would be reduced—but either way the Russians saw it as a quite unacceptable proposition and turned it down. If it was true, and it was never confirmed officially, it opened up the interesting possibility of areas of very detailed co-operation with a different sort of Russia in the new world which we are now in. Meanwhile, in the year since the original report, the rule of law has become even more distorted in Russia. There is more and more evidence of criminality and corruption—in very high places, I am afraid—and a general feeling that dealing with the Russian bear is getting more difficult, not easier. I agree with the guiding theme of both the original report and its follow-up, which is hard-headed and practical engagement rather than isolation, despite all the difficulties and provocations. I am sure that that is the right approach. I confess that, rather like my noble friend Lord Selkirk, I found the follow-up report rather more attractive than the original, which, frankly, I found quite disappointing. The original report seemed to be based much more on hope and "wishing it was so" with regard to EU co-ordination—longing for Europe to speak with one voice, to co-ordinate its policies and to be united—than on reality, which is probably a better basis on which to build our policy. The reality is that different EU members have very different interests depending on their history, their position, their proximity to Russia, their energy needs and a whole variety of other considerations, and that will continue. Professor Cooper reminded the committee of that back in the original report in clear and brutal terms. I wish it were not so. Indeed, we can all wish that, but we have to be realistic and hard-headed about where to start building our policy initiatives. The follow-up report struck a much more practical and hands-on note than the original. On energy aspects, I am not so happy. My noble friend Lord Crickhowell very kindly referred to me and made some very perceptive and well founded remarks. We may have the seeds of a debate here of the sort which, ideally in your Lordships’ House and in committees, can tease out how we should position ourselves in the United Kingdom on energy needs and energy security in the next 10 or 20 years. We agree on one thing; the Russian supply system is not 100 per cent reliable, to put it mildly. I had occasion, a few years back, rather naively to ask Mr Lavrov, the Russian Foreign Minister, whether Russia would use its energy resources as a diplomatic weapon. He looked at me pityingly and said, "Of course". We have no doubt that that will continue. What worries me about the original report and the follow-up report is that there are one or two rather serious omissions from the whole picture. First, there is no mention in either report of the fact that part of the Russian strategy is to find new customers in the East and to build new pipelines, one of which is now under rapid construction to China from south-central Asia, to supply both China and Japan and to meet the colossal demands of the very fast growing economies, whenever they recover from the present recession, which will manifest themselves in Asia. That is a bigger issue. Secondly, I am not sure that the central question about the Nabucco pipeline has been grasped. The central question, which the noble Lord, Lord Anderson, and other noble Lords have touched on this afternoon, is whether there will be enough gas to make the thing even remotely commercial. This is not just a question of collecting gas in Baku but whether the pipeline under the Caspian from Turkmenistan can be built, whether the Turkmenis and their President are prepared to send the gas that way rather than eastwards to Asia, and whether the Russians will allow that pipeline to be built under the Caspian. They are raising every difficulty. The latest I heard was that they are worried that the pipeline will vibrate so much that it will disturb the sturgeon and reduce the output of caviar. They appear to be prepared to use any argument about the Caspian part of the pipeline, although they have different arguments for building their own pipeline under the Baltic, as we have heard. As the noble Lord, Lord Crickhowell, rightly says, all this really does matter to us. It is true that we are not very reliant on Russian gas at the moment compared with the seven EU countries that are 100 per cent reliant on it. Many others, such as Germany, are 57 per cent reliant on it, so it sounds as though we need not worry too much, but that is very wrong. Dieter Helm said as a witness in the original report that we are "terribly exposed", because we have not built replacement nuclear stations. In the 10 years ahead, we will have to go for carbon capture and storage if we can work it out, which we have not done yet. We will certainly have to go for many more gas turbines and will drink a whole lot of gas to produce our daily electricity and to keep the nation warm. We will also rely substantially on Norway and on liquid natural gas imports from Algeria, Qatar and various other points including Norway and even Russia. It is in our interests as a nation, rather than as the broader EU, and in the interests of our energy security to see that these sources are not diverted to a gas-hungry central Europe. It therefore follows that we have an interest in seeing alternative sources of gas come through to central Europe from places other than unreliable Russia. That is the central point that we need to keep in mind when we consider our energy security as a nation within the broader context of the EU. I should add that in the medium term—unfortunately, I do not think that the report gets around to this—we may all rely much less on Russian gas altogether, whether or not it can fulfil its contracts in the short term, not least because of the enormous boom in US natural gas production. So far this has hardly been noticed, or even recorded, by the IEA or indeed by energy officials in this country, but the US probably now has 2.2 trillion cubic feet of gas available to it and is considering mounting a major programme of LNG exports back to Europe on a colossal scale. That is enough gas to supply America’s entire needs for gas for 100 years ahead. This will change the whole scene with regard to Russia, and will probably necessitate another report by our tireless colleagues. It will begin to alter the pattern of relationships with Russia; it will remain important, but the situation will be different. It is excellent to have this superb debate and to hear the views of so many experts. Generally in all this, I see the danger of relying too exclusively on the hope, the wish and the fingers crossed that something will come up in the nature of a closer, more co-ordinated EU energy policy. If we are concerned about clarifying and advancing our own interests, the EU dimension is vastly important, but we must be careful about relying on it exclusively and about interpreting our interests solely by looking through the EU lens. We will find that lens extremely blurred and not the ideal optical instrument to look clearly, coldly and precisely at our own interests and concerns in the years ahead. I hope that future reports will adopt a slightly different perspective from the one in the original report, and I hope that they will build on the practicality and excellent focus of the follow-up report on the immediate issues. In the longer term, Russia needs us, we need Russia, and some kind of modus vivendi—peace, democracy, any other broad concept that one likes to use—must be developed. Russia will remain a highly powerful element in the global future, and we in Europe need to work out exactly how to get on with it. It will be difficult but we must keep trying.